Frenkel Topping Regulatory News (FEN)

26 Mar 2007 11:42

Frenkel Topping Group PLC26 March 2007 FRENKEL TOPPING GROUP PLC ("FRENKEL TOPPING" OR "THE GROUP") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 Frenkel Topping provides specialist independent financial advice on theinvestment of personal injury damages and clinical negligence awards. FrenkelTopping offers a complete service for all personal injury claim handlers,lawyers and individual clients dealing with awards from a few thousand pounds tomulti-million pound cases. Frenkel Topping's expertise includes assetprotection, bespoke investment portfolios, analysis of periodical payments,Court of Protection portfolios and provision of trustee and receivership bankaccounts. Financial Highlights Year ended 31 Dec Year ended 31 Dec 2006 2005 Turnover £2,570,504 £2,303,306Operating loss before exceptional items, share based compensation andamortisation of goodwill £(93,649) £(161,114) Operating loss £(884,777) £(938,487) Loss before taxation £(932,483) £(935,458) Basic and fully diluted loss per share (1.85)p (1.72)p Operational Highlights • Funds in the Investment Management Service (FIMS) as at 31 December 2006 £171 million (31 December 2005: £145 million) • Operating profit before exceptional items, share based compensation and goodwill recorded for 6 months July - December • Recurring income grown to £1.1m (2005 £0.8m) • Focus on growing FIMS to increase recurring income For further information:- Frenkel Topping Group plc Richard Fraser (Chief Executive) Tel No: 0161 886 8000 W.H. Ireland Limited David Youngman Tel No: 0161 832 2174 CHAIRMANS STATEMENT Frenkel Topping Plc today announces its results for the year ended 31 December2006. For the period 1 January to 31 December 2006, the Group recorded aturnover of £2.6m (2005 £2.3m) and a loss on ordinary activities beforeexceptional items, share based compensation and goodwill of £93,649 (2005£161,114). There was a loss before taxation of £932,483 (2005 £935,458). Whilst any trading loss is disappointing the Board are pleased that the Group isnow experiencing the benefits of the actions taken to return the Group toprofitability at the operating profit level. For the final six months of the year operating profit before exceptional items,share based compensation and goodwill of £80,812 was recorded. This wascomparable with an operating loss of £174,461 for the six months ended 30 June2006 and a comparable loss of £161,114 for the year ended 31 December 2005. Jan - June July - Dec 2006 £ £ £ Turnover 1,243,822 1,326,682 2.570,504 Cost of Sales (682,157) (488,310) (1,170,467) Gross Profit 561,665 838,372 1,400,037 Admin Expenses (736,126) (757,560) (1,493,686) Operating (Loss)/Profit (174,461) 80,812 (93,649) Our income is gained primarily from fees and commission together with recurringincome from Funds in the Investment Management Service (FIMS). The Groupturnover of £2.6m (2005 £2.3m) included £1.1m (2005 £0.8m) of recurring incomefrom FIMS. The total FIMS grew by 18% from £145m to £171m during the year. It is our intended strategy for future years to grow the FIMS with the resultantrecurring income in order to establish more stable income streams and to providethe best way of increasing shareholder value. Costs have been tightly controlled during the year and will remain so for thefuture as the clear priority of the Group moves to cash generation. Net debt asat 31 December 2006 was £508,211 and the net asset value of the Group at thesame date was £4,400,799. Between June and August the Group purchased 16% of the issued share capital ofFrenkel Topping Limited and Frenkel Topping Structured Settlements Limited byway of issuing 9,183,333 new Ordinary Shares in Group at an issue price of£0.24. The shares have a lock-in period of 1 year. As a result the Group hasincreased its holding in the issued share capital of Frenkel Topping Limited andFrenkel Topping Structured Settlements Limited to 83%. The Board does not intend to propose a final dividend. There are still significant growth opportunities open for the Group and we arecurrently pursuing a number of potential partnerships which may provideincreases in revenue and profitability. The new year has started positively andwe are confident that good progress can continue during 2007. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2006 2006 2005 £ £ TURNOVER 2,570,504 2,303,306 Cost of sales (1,170,467) (967,914) GROSS PROFIT 1,400,037 1,335,392 ADMINISTRATIVE EXPENSES Amortisation of goodwill (485,842) (346,677) Share based compensation (198,301) (88,197) Exceptional items (106,985) (342,499) Other administrative expenses (1,493,686) (1,496,506) TOTAL ADMINISTRATIVE EXPENSES (2,284,814) (2,273,879) Operating (loss) before exceptional items, share basedcompensation and goodwill (93,649) (161,114) - exceptional items (106,985) (342,499) - share based compensation (198,301) (88,197) - goodwill (485,842) (346,677) OPERATING LOSS (884,777) (938,487) Profit on partial disposal of interest in subsidiaries - 41,015 Interest payable (47,706) (37,986) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (932,483) (935,458) Tax on loss on ordinary activities (25,039) (19,273) LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (957,522) (954,731) Equity minority interest 16,346 168,789 RETAINED LOSS FOR THE FINANCIAL PERIOD (941,176) (785,942) BASIC LOSS PER ORDINARY SHARE (1.85)p (1.72)p FULLY DILUTED LOSS PER ORDINARY SHARE (1.85)p (1.72)p All the activities of the group are classed as continuing. CONSOLIDATED BALANCE SHEET As ended 31 December 2006 2006 2005 £ £FIXED ASSETS Intangible assets 4,609,445 2,620,855Tangible assets 43,648 68,426 4,653,093 2,689,281CURRENT ASSETSDebtors 833,466 759,988Cash at bank and in hand 29 183 833,495 760,171 CREDITORS: amounts falling due within one year (1,119,599) (782,553) NET CURRENT LIABILITIES (286,104) (22,382) TOTAL ASSETS LESS CURRENT LIABILITIES 4,366,989 2,666,899 CREDITORS: amounts falling due after more than one year (30,689) (34,807) PROVISIONS FOR LIABILITIES AND CHARGES (240,000) (233,973) MINORITY INTERESTS 304,499 540,955 NET ASSETS 4,400,799 2,939,074 CAPITAL AND RESERVESCalled up share capital 273,915 227,998Other reserve 286,498 88,197Own shares (25,000) (25,000)Share premium account 5,744,876 3,586,193Profit and loss account (1,879,490) (938,314) EQUITY SHAREHOLDERS' FUNDS 4,400,799 2,939,074 CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2006 2006 2005 £ £ Net cash (outflow) from operating activities (141,306) (108,587) Returns on investments and servicing of finance (44,336) (37,986) Taxation (18,415) (9,595) Capital expenditure (5,441) (35,472) Acquisitions and disposals (17,032) 486,760 net cash (outflow)/inflow before financing (226,530) 295,120 Financing 15,863 16,819 (decrease)/increase in cash in the period (210,667) 311,939 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2006 2005 £ £ (Decrease)/increase in cash in the period (210,667) 311,939 Net cash outflow from debt financing (15,863) (16,819) Change in net debt resulting from cashflows (226,530) 295,120Other (3,370) - Change in net debt (229,900) 295,120Net debt as at 1 January (278,311) (573,431) Net debt as at 31 December (508,211) (278,311) 1. PRESENTATION OF FINANCIAL INFORMATION Information in this preliminary announcement does not constitute statutoryaccounts of the Group within the meaning of Section 240 of the Companies Act1985. The figures for the year ended 30 December 2006 are audited. Thepreliminary announcement is prepared on the same basis as set out in theprevious year's statutory accounts. The preliminary announcement is prepared on a going concern basis, which assumesthe Group will continue in operational existence for the foreseeable future. TheGroup's ability to meet its future working capital requirements and thereforecontinue as a going concern is dependent upon it being able to generatesignificant revenues and free cash flow. The directors have preparedprojections which they consider to be prudent and demonstrate that the businesscan operate within its existing cash resources, and have identified a series ofrealistically achievable actions that they are committed to taking to mitigatethe rate of cash outflow should revenues not be secured as predicted. Statutory accounts for the year ended 31 December 2005, which were preparedunder accounting practices generally accepted in the UK, have been filed withthe Registrar of Companies. The auditors' report on those accounts wasunqualified and did not contain any statement under Section 237 (2) or (3) ofthe Companies Act 1985. 2. TURNOVER AND SEGMENTAL ANALYSIS The total turnover, losses before tax and net assets areattributable to the one principal activity of the Group, the provision of adviceregarding structured settlements and related financial services. An analysis of turnover is given below: 2006 2005 £ £ United Kingdom 2,570,504 2,303,306 3. TAX ON LOSS ON ORDINARY ACTIVITIES Analysis of charge in period 2006 2005 £ £Current tax UK Corporation tax based on the results for the period 39,404 5,020at 30% (2005: 19%) Adjustment in respect prior year (12,439) 27,615 Total current tax charge 26,965 32,635 Total deferred tax (1,926) (13,362) Tax on loss on ordinary activities 25,039 19,273 FACTORS AFFECTING TAX CHARGE FOR PERIOD The tax assessed on the loss for the period is that of the Group, the combinedrate being lower than the standard rate of corporation tax in the UK of30%. The differences are explained below: 2006 2005 £ £ Loss on ordinary activities before taxation (932,483) (935,458) Loss on ordinary activities multiplied by standard rate of (279,746) (280,637)corporation tax in the UK of 30% (2005: 30%) Effects of: Expenses not deductible for tax purposes 151,916 126,952(including goodwill) Capital allowances in excess of depreciation 2,170 13,362Deferred tax movements not recognised - 173,472Effect of rate change - (10,277)Adjustment to tax in respect prior period (12,439) -Short term tax differences 58,358 -Marginal relief (9,287) 4,743Unrelieved tax losses and other deductions in period 115,993 5,020 Current tax charge for period 26,965 32,635 FACTORS THAT MAY AFFECT FUTURE CHARGES The Group has unrecognised deferred tax assets of £546,152 at 31 December 2006and £446,732 at 31 December 2005, which have arisen mainly due to trading lossescarried forward. The deferred tax asset has not been provided for because it isuncertain whether the trading losses giving rise to the asset will be utilisedin the foreseeable future. 4. LOSS PER SHARE The calculation of basic loss per ordinary share is based on losses of £941,176(2005: £785,942) and on 50,956,558 (2005: 45,599,614) ordinary shares of 0.005peach being the weighted average number of ordinary shares in issue during theperiod. The loss for the period and the weighted average number of ordinary shares forthe purpose of calculating the diluted loss per share are the same as for thebasic loss per share calculation. This is because the outstanding share optionswould have the effect of reducing the loss per ordinary share and wouldtherefore not be dilutive under the terms of Financial Reporting Standard ("FRS") 22. 5. GROUP GROSS CASHFLOWS Reconciliation of operating loss to net cash outflow from operating activities 2006 2005 £ £ Operating loss (884,777) (938,487)Share based compensation 198,301 88,197Depreciation and amortisation 516,061 458,654(Increase)/decrease in debtors (71,551) 119,986Increase in creditors 100,660 163,063 Net cash outflow from operating activities (141,306) (108,587) 2006 2005 £ £Returns on investments and servicing of finance Interest paid (44,336) (37,986) Taxation Payment of UK corporation tax (18,415) (9,595) Capital expenditure Payments to acquire tangible fixed assets (5,441) (35,472) Acquisitions and Disposals Purchase of additional shareholding in subsidiaries (17,032) - Proceeds from disposal of interest in subsidiaryundertakings - 511,760 Purchase of own shares - (25,000) (17,032) 486,760 Financing New short term loans 150,000 25,000Repayment of bank loans - (13,296)Other loan (repayments)/advances (130,019) 13,015Capital element of finance lease payments (4,118) (7,900) 15,863 16,819 6. GROUP ANALYSIS OF CHANGES IN NET DEBT DEBT As at As at 1 January Cash Other non 31 December cash changes 2006 flows 2006 £ £ £ £ Cash at bank and in hand 183 (154) - 29Overdrafts (77,216) (210,513) - (287,729) (77,033) (210,667) - (287,700) Debt due within one year (162,353) (19,981) (3,370) (185,704)Debt due after one year (25,000) - - (25,000)Finance leases (13,925) 4,118 - (9,807) (201,278) (15,863) (3,370) (220,511) Net debt (278,311) (226,530) (3,370) (508,211) 7. BASIS OF THE PRELIMINARY ANNOUNCEMENT The board of directors of Frenkel Topping Group Plc approved the PreliminaryResults on 23 March 2007. The statutory accounts for the year ended 31 December 2006 will be delivered tothe Registrar of Companies following the Annual General Meeting. The statutoryaccounts will be posted to shareholders on 30 March 2007. Further copies willbe available to the public, free of charge, at the company's registered office,Frontier House, Merchants Quay, Salford Quays, Manchester M50 3SR. The Annual General Meeting will be held on 23 April 2007 at 10 am at AddleshawGoddard LLP, 100 Barbirolli Square, Manchester, M2 3AB. This information is provided by RNS The company news service from the London Stock Exchange